Assessing the Effects of Gas Price and Tax Incentives on Promotion of Energy Efficient Vehicles: A Time Series Analysis PublicDeposited

Descriptions

Global warming is an increasingly serious problem around the world. To mitigate the influence of global warming on people’s lives, the Obama Administration put an emphasis on reducing greenhouse gas (GHG) emissions to mitigate global warming. The adoption of energy efficient vehicles, including hybrid electric vehicles (HEVs), plug-in hybrid vehicles (PHEVs) and electric vehicles (EVs), is considered to be a promising tool in reducing CO2 emissions to achieve energy security. In 2011, President Barack Obama set a goal of getting one million EVs on the roads by 2015. However, the EVs sales still fell far short of Obama goal. This research uses time-series datasets to design OLS estimation models for regression analysis. In addition to conducting an OLS analysis on US data, this paper examines underlying time trends between the expiration of Georgia’s state tax credits which are the most generous in the US on EVs sales. We also employ consumer preference theory and design estimation models to analyze the impact of rising gas price on the sales of HEVs, PHEVs and EVs. The results show that the sales of HEVs experienced significant changes after the U.S. Energy Policy Act of 2005 set in motion tax credits. Moreover, the sales of EVs have been impacted by the change of tax incentives. We also find the rising gas prices can also promote the sales of the energy efficient vehicles. The policy implications of the research are that the the government may take further steps in improving the tax incentives system for the purchases of energy efficient vehicles and controlling the gas prices within the socially optimal range to promote energy efficient vehicles adoption in U.S. to reduce greenhouse gas emissions and mitigate global warming.